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Russia Blasts Off Into A New Space Race (Int'l Edition)

February 25, 1996

International -- International Business: RUSSIA

RUSSIA BLASTS OFF INTO A NEW SPACE RACE (int'l edition)

It grabs for a big share of commercial satellite launches

At Kazakhstan's Baikonur Cosmodrome, engineers are double-checking a newly constructed cleanroom where satellites will be assembled to Western standards. Their deadline is Mar. 28. That's when a Russian-built Proton missile is scheduled to blast off carrying a satellite made by U.S.-based Hughes Space & Communications.

The Proton launch marks the start of a new space race that could be just as important to the Russians as the blastoff of the first Sputnik in 1957. Their initial aim this time is to get their share of the highly lucrative market for commercial satellite launches. The business, worth an estimated $1.5 billion annually, is now dominated by Europeans. The Russians are likely to be formidable competitors. "Space technology is one thing Russia has always done very well," says Bretton S. Alexander, an engineer with the ANSER Center for International Aerospace Cooperation in Moscow. "Their launch vehicles are reliable, on time, and cheaper."

The Russians are off to a good start in the commercial market. The March launch will expand Societe Europeenne des Satellite's television satellite system. Later this year, Protons will also launch satellites for Loral Corp. and Motorola Inc. Officials at Khrunichev, the Moscow company that makes Protons, say they have orders for $1.5 billion in launches between now and 2000.

For the past ten years, the European consortium Arianespace has controlled 50% to 60% of the commercial-launch market. The rest is divided between China and two U.S. companies, Lockheed Martin and McDonnell Douglas, which have a 26% share. Russian launches are 15% cheaper than the Westerners'. While China's prices are even lower, its vehicles are not considered as reliable.

Russia badly needs new business to prop up its once proud space industry. Orders for military launches have dropped off sharply since the Soviet Union collapsed in 1991. "We wouldn't be able to survive without the new commercial projects," says Viktor K. Barmyonov, vice-president of Energia, which made the original Sputnik.

The Russians are jumping in just when the market is due for an uptick. Old communications satellites need to be replaced, and there's a big demand for telecommunications services in developing economies.

Meantime, to gain much-needed funding and marketing services, Energia and others are forging alliances with ex-cold-war rivals (table). Most of the Proton launches are marketed by International Launch Services, a joint venture of Lockheed Martin, Energia, and Khrunichev. A Boeing-led venture called Sea Launch will use Ukrainian Zenit rockets to put up satellites starting in 1998. The plan is for an oceangoing vessel, based in Long Beach, Calif., to sail to the middle of the Pacific, near the Equator, for the satellite launches.

"REAL THREAT." Russian space technology also is making its way to American shores. Loral Corp. plans to build and launch communications satellites with Energia and Russia's Gazprom, the huge gas monopoly. In another major venture, Lockheed Martin Corp. recently decided to put Russian RD-180 engines in its Atlas rocket in a joint venture that includes Pratt & Whitney and Russia's Energomash. "These engines will help make the Atlas rocket more price-competitive," says Robert E. Casner, program director for the RD-180 engine.

But some U.S. industry officials, fearing fresh competition, are grumbling about the recent decision by Vice-President Al Gore and Russian Prime Minister Viktor S. Chernomyrdin to allow Russia up to 20 commercial launches through 2000. "We think the increase in quotas poses a very real threat to the U.S. launch industry," says Robert O'Brien, Washington spokesman for McDonnell Douglas Corp.

Maybe. But for the Russians, the commercial space business is just the boost Russia needs as its military downsizes. With commercial demand so intense, you could say the sky's the limit.BY PATRICIA KRANZ IN MOSCOW, WITH STAN CROCK AND JOHN CAREY IN WASHINGTON AND MIA TRINEPHI IN PARISReturn to top